What's Happening?
The Pennsylvania House Finance Committee has advanced House Bill 2090, a legislative proposal aimed at providing relief to retailers from interchange fees charged on the sales tax portion of transactions. This bill, supported by the Pennsylvania Food Merchants Association (PFMA), seeks to alleviate the financial burden on food retailers and convenience stores, which often operate on thin profit margins. Currently, retailers are required to pay swipe fees on the entire transaction amount, including sales tax, which they collect for the state and do not retain. The proposed legislation would prevent credit card companies from imposing these fees on the sales tax portion, offering modest but significant financial relief to high-volume, card-dependent
retailers. The bill also includes provisions to protect merchants in disputed transactions and reinforces their ability to engage in lawful pricing practices.
Why It's Important?
The advancement of House Bill 2090 is significant as it addresses a long-standing issue faced by retailers, particularly those in the food and convenience store sectors. By eliminating swipe fees on the sales tax portion of transactions, the bill could reduce overall payment acceptance costs for retailers, especially those processing numerous small-ticket transactions daily. This change could enhance the financial viability of these businesses, allowing them to maintain competitive pricing and potentially pass savings onto consumers. The bill also highlights the broader issue of limited competition in the credit card marketplace, dominated by Visa and Mastercard, and underscores the need for reform in the payments system to support retailers nationwide.
What's Next?
While the committee's vote advances the bill, it does not yet make it law. The proposal will continue through the legislative process, with PFMA working alongside lawmakers to push for its passage in the House. The bill's progress reflects a growing trend among states to pursue their own swipe-fee policies amid stalled federal reform efforts. Retailers at the national level continue to advocate for the Credit Card Competition Act, which aims to introduce routing competition among card networks. If successful, Pennsylvania's legislation could serve as a model for other states considering similar measures.
